Settlement Agreements and Lacking Mental Capacity
2nd December, 2016
The recent case of Glasgow City Council v Dahhan UKEAT/0024/15 considered whether an Employment Tribunal had jurisdiction to decide whether lack of mental capacity meant a settlement agreement was unenforceable.
Mr Dahhan was employed by Glasgow City Council as a teacher. He brought tribunal claims for direct discrimination, harassment and victimisation because of race but the parties entered into a settlement agreement whereby Mr Dahhan gave up all claims arising from his employment with the Council, with the exception of claims in respect of enforcing the agreement, personal injury claims not apparent at the time of signing and pension claims.
Mr Dahhan later wished to withdraw his claims which were dismissed under Rule 52 of Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. Mr Dahhan subsequently asked the tribunal to reconsider the dismissal of his claims, stating that he lacked capacity to instruct his solicitor and to make decisions at the time that he entered into the settlement agreement.
The Employment Judge held that the tribunal had jurisdiction to set aside the settlement agreement on the ground that it was invalid because Mr Dahhan did not have the capacity to contract at the time he entered into it.
The Council appealed the decision but the Employment Appeal Tribunal dismissed the appeal.
This is the first case to consider whether a tribunal has jurisdiction to set aside a settlement agreement due to a party not having contractual capacity at the time of entering into it.
If you are facing claims from an employee or would like to enter into a settlement agreement, contact our Employment Department for specialist legal advice.
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